Doctor Employment Lawyer Blog

Show me the money...

Tue, 15 May 2012 12:42:06 -0500

Everyone knows that training to be a physician is expensive. Not only do you pay the outrageous expense of medical school, but you follow graduation with residency and internships earning a pauper's pay. Clearly, negotiating your first year attending salary is pretty critical. At least it seems pretty clear to us.

Despite all of the expense of a medical education very few residents we speak with are prepared to negotiate their first physician employment contract. Instead, many residents accept the pay they are offered and sign whatever is put in front of them.

Your first year's salary is the starting point for all future salary discussions, raises and negotiations. Therefore, if you start out $10,000 below your value, you will be spending the first few years of your career trying to catch up. It's possible that you will never the notice the difference, but not negotiating means you have no idea whether you are missing out on an opportunity.

I am not saying that the first offer is always a bad offer, or even that the first offer is never the bottom line last offer. But I am saying that, if you don't ask, you don't get.

Who needs to agree to contract amendments?

Tue, 08 May 2012 17:57:14 -0500

Have you ever had a situation where someone made you a promise and then later tried to change the terms of that promise? Maybe a friend offered to drive you to work every day for nothing in return and, after a month or so got sick of that deal and asked you to start paying for gas.

Contracts (even physician employment contracts) are really just promises where both sides give something up in exchange for some agreed upon terms. And sometimes (even in the case of an employment agreement) conditions change and the deal has to too.

Many practice groups today have complex compensation models that based on revenue estimates that can only be met by maintaining a specific patient load, physician staff and/or medical support staff. A significant change in any of those factors could make a compensation plan unsustainable.

So what happens if you meet all your obligations under your employment agreement and, for reasons completely outside your control, the practice loses 50% or more of your revenue? Can your employer alter the terms of your employment contract?

As usual, it depends on the specific terms of your agreement. However, in most cases, changes to the employment agreement require that both you and your employer agree to the changes. At the same time, if your employer has an employment termination provision, your bargaining power may not be all that powerful.

Before making any decisions about how to respond to a proposed contract amendment, evaluate your value and ask yourself the following:

(1) How necessary am I to this group? Keep in mind that everyone is replaceable. But being replaceable is not the same thing as "easily replaceable." If you come with a renowned reputation or a valuable research grant you likely have more room for push back than a newbie with no experience.

(2) What are my colleagues doing? There is often strength in numbers. A practice group may risk losing one physician, but would it really risk losing all of you?

(3) What is my Plan B? Having other opportunities waiting in the wings makes pushing back a much less risky option.

Keep in mind that there is usually more than one solution in contract negotiations. Taking an all or nothing approach can often leave you with nothing. That doesn't mean you should accept a compensation reduction, but it does mean you should explore all options before walking away.

Physician Employment Applications: What to disclose?

Tue, 10 Apr 2012 12:34:19 -0500

What do you have to disclose on your physician employment application? The easy answer to this question is: Everything. Well, not EVERYTHING, but everything that is specifically requested. For example, if you are asked to disclose "any arrest history (regardless of conviction)" and you fail to disclose that underage drinking ticket that you received when you were 18 years old, it could come back as a basis for termination with cause in the future.

Not only do you need to read the questions you are asked very carefully, but also make sure you understand what your Physician Employment Agreement requires with respect to to the answers you provide.

This seems pretty straight forward, but often the questions are not quite as clear as the example above. Whenever a question might be subject to interpretation, you have to determine whether to err on the side of caution. It really depends a lot on what is asked and the context within which it is asked.

As we always do in this blog, it comes back to reading everything you submit or sign very carefully. It may take an extra hour that you don't think you have, but it will be worth protecting your job and your reputation down the line.

Your patients....or your employer's patients?

Tue, 03 Apr 2012 10:21:56 -0500

By: Poonam Khatri

You've spent years in studying, training, and building a reputation in your profession. As a result, you formed strong relationships with your patients. But, will you be able to take those patients with you to your own private practice? If your employment contract contains a non-solicitation clause, you better make sure you thoroughly understand what it says and the possible ramifications.

First, it is important to understand what solicitation means. For example, would mailing advertisements to certain zip codes be considered "solicitation?" Would notifying your patients of your new practice or employer be considered "solicitation?"

Second, which patients are off-limits? Sometimes a non-solicitation clause will be very general, but sometimes it will define which patients are included. Still, there are many scenarios which may need to be addressed. For example, what if the practice has an established patient base, but you never personally treated some of those patients, can you solicit those patients?

Third, can the patients you've treated come to you on their own? A patient always has a right to seek out a physician, and to obtain treatment by any physician of the patient's choosing. But, what role will your employer play in assisting such patients? How will your patients be notified that you are leaving? Will the employer provide patients with your forwarding contact information?

Much of this is negotiable, and it is advisable to work out these details up-front, before accepting employment. It's always a good idea to do a thorough review of your employment contract, so that you can be sure that you protect the reputation you have worked so hard to establish.

Are you locked in?

Tue, 27 Mar 2012 12:36:01 -0500

Most doctors are fairly well versed in the work of physician non-compete agreements. It's the other terms that become confusing. For example, if you have a one, two or three year Employment Agreement, can you leave before that term expires?

The answer is almost always "yes, but...." By this I mean that no court will require you to work for an employer for whom you do not want to work. At the same time, the terms of the agreement you signed might include penalties for early termination. This is especially true if your agreement is subject to community or government funding. In some cases, leaving early can actually cost a physician a substantial sum of money.

Sometimes the cost of resigning is indirect. Some medical professional employers use restrictions on employment to encourage contractual performance. This means that you can resign without any financial cost, but you can't work anywhere else providing the same services for the remainder of the contract term.

Nearly every employer uses their own unique physician employment contract to govern terms of employment. The important thing is to understand not only the terms, but also the enforceability of those terms. You may be locked in, but you may not be.

Money isn't everything

Tue, 06 Mar 2012 14:00:51 -0500

By: Poonam Khatri

This time of year, many residents receive their first offers of employment as a physician. This is an exciting time; all those years of hard work are finally paying off. Many residents, however, make the mistake of focusing too heavily on their salary and ignore benefits, which can be just as valuable.

Some of the benefits provided by employers include a bonus, expense reimbursement, retirement plans, insurance, and paid time off. It is also important to review any restrictions imposed. A physician employment contract may place restrictions on you that can extend even after your employment ends. Here are some important things to think about when reviewing your employment contract.

If you are eligible for a bonus, it is important to look at its structure and evaluate the likelihood that you will receive the full amount. A bonus can be structured a number of different ways, it may be tied to the collections you personally generate, or it may be tied to practice group's performance.

If you are moving, reimbursement for your moving expenses is another fringe benefit to consider. Other reimbursable expenses may include professional society dues, attendance at conferences, and continuing education credits.

Your contract should make your schedule and duties relatively clear. Although your schedule may not be very detailed, a general description including your call schedule should be noted. If you have agreed to work at a specific location, make sure your employer cannot move you without your approval. The contract should also clearly define your paid time off, including vacation and sick time.

Although you are early in your career, it's never too early to start thinking about retirement. Many employment contracts will offer a 401(k) plan, a profit sharing plan, or a money purchase pension plan. It's important to understand and take advantage of these benefits, particularly if your employer offers a matching contribution.

Speaking of the future, it is also important to think about your future role with your employer. If you are joining a practice, will you be able to one day be a partner? When should you expect to make partner? What is the buy-in formula that is used? Will you be an equal voting partner? In some circumstances, it can be beneficial to have this information included in your contract.

Another issue, often overlooked, is potential restrictions the employer will place on you. Some contracts require that any income earned though professional activities, such as lectures or expert testimony, belong to the practice. This restriction may include moonlighting as well. Another important restriction is a non-compete agreement. Many employers will prohibit you from practicing within a certain radius of their facility for a number of years after you employment ends.

These benefits can add up to be very valuable and contribute to your quality of life. It's always a good idea to have your contract reviewed to make sure you are getting everything that you deserve.

Does a physician employment contract guarantee employment?

Tue, 28 Feb 2012 09:29:16 -0500

Nearly every state in the U.S. has adopted a policy of employment "at-will," meaning either the employee or the employer can terminate the relationship at any time, for any reason. For most of us this means we can be fired at will, regardless of whether there is any cause for termination. Employment contracts usually override the "at-will policy" and offer a promise of employment. Sometime that means that your employment is guaranteed for a specific amount of time. However, as with everything in life, there are few true guarantees.

Assuming that your employment agreement does obligate the hospital or practice group to continue your employment for a specific periof of time, there are always exceptions. For example, you typically must maintain privileges at a specific hospital or hospital group. That seems like a straighforward obligation, but what if your employer decides to withhold assistance in maintaining privileges or stops paying your dues in a timely fashion?

More commonly we see doctors signing a one, three or even five year agreement that actually includes a provision that says the doctor may be terminated at any time, without notice, with or without cause. Essentially, the contract is in effect unless otherwise terminated. This means that, so long as the agreement is in place the employer will perform its obligations. This also means that, despite a one, three or even five year term, there is no guarantee of continued employment.

If you are moving your family across the country to take a job that you think will last at least five years, make sure your physician employment agreement says what you think it says.

Can your job stop you from making money?

Tue, 31 Jan 2012 10:07:47 -0500

It sounds a bit ridiculous, but it could be true. It is not uncommon for physician employment agreements to include a clause that gives your employer the right to collect any and all income that you receive from outside activities. This includes speaking fees, expert witness fees and moonlighting activities.

You might think this sounds a bit unfair. I can assure you that your employer thinks your salary pays for all professional activities. The fact is that being a doctor is a unique profession in that your devotion to your employment can be critical to patient lives. It is not always unreasonable for a physician employer to want to ensure that your full working time and attention is devoted to your practice, hospital, and/or division. But, that doesn't mean that you should be denied the ability to earn extra income for work that you actually perform.

The key fact that all physicians should keep in mind is that your employer can only lay claim to your outside income if you sign an agreement that says they can. If you are negotiating a doctor employment contract with an employer that considers such a provision an absolute requirement, you have the choice as to whether you want to work for such an organization.

There are plenty of hospitals and practice groups out there that want you to build a name for yourself by speaking at conferences. And there are plenty of hospitals and practice groups that give you the freedom to make enough money to pay back loans and support your family through expert witness fees and/or moonlighting. It's better that you know and understand which type of employer you will be working for before you sign the employment agreement. And, if you're not sure, asking might be a good idea.

Don't go into a tailspin over tail coverage!

Tue, 24 Jan 2012 17:47:05 -0500

You are ready to move to a new hospital or practice group. You think you have a really great offer, but do you really? It is important to look beyond just compensation when assessing a physician employment agreement. Your current malpractice carrier may not cover you after you leave your current position. In most situations, supplemental insurance or "tail coverage" is needed to cover malpractice claims made after you leave employment.

In the past, malpractice coverage was usually "occurrence-based," which meant that as long as a you maintained coverage at the time of the alleged malpractice incident, you would be covered. However, with the rise of malpractice claims, "claims-made" policies have become more popular. Claims-made policies cover a physician for claims made during the period of time in which the insurance is maintained, and therefore must be continually maintained. However, when you change jobs, it can be extremely costly to obtain claims-made coverage with the new employer that would cover prior acts with the past employer. Thus, tail coverage would need to be purchased to protect you.

But, whose responsibility is it to foot the bill for tail coverage? Often times, this is negotiable. Occasionally, a hospital or practice group will pay for tail coverage complete. More commonly, you and your employer either share in the cost, or the employer may place certain conditions and terms under which it will pay for tail coverage. There are a number of unique and creative agreement possibilities.

It is important to assess your personal needs when agreeing to a doctor employment contract with regard to tail coverage. Properly negotiating your employment agreement will provide you with the financial certainty and flexibility necessary for you to be able to take advantage of attractive professional opportunities that may come your way.

written by Poonam Khatri

Due Diligence for Joining a Practice

Tue, 10 Jan 2012 10:45:16 -0500

Before there is even a physician employment contract to review, doctors should investigate whether a hospital or practice group is truly going to be a good fit. Too many times we have seen physicians get into bad employment situations just because the pay was good. It does not take long for them to realize that no amount of compensation can justify staying in an uncomfortable working situation for the long term.

The following tips will help you conduct a little due diligence before accepting an offer of employment:

1. Culture. Speak with as many team members as possible. Don't just contact the physicians. Try to speak with the nurses, PTs, assistants and support staff. They will likely have a different perspective to share.

2. Reputation. Use the internet to find out what people are saying about the practice/group. Search each individual physician as well as the practice itself.

3. Volume. Ask the following questions: How many patients does the practice have? What is the breakdown of private pay versus public pay patients? How many patients does each doctor see per clinic? What were the previous year's total collections for the practice/group?

4. Vision. Ask about the practice/group's future plans. Are there plans for growth? What opportunities exist for you and what opportunities have your potential colleagues been able to conquer?

5. Attrition. How many employees have left the practice/group over the last 3 years? If a high number of people in any position have left, that might be an indication of how your potential colleagues interact with others.

Do Physicians Still Have to Worry About Non-Competes in Illinois?

Mon, 12 Dec 2011 06:43:23 -0500

Chicago area hospitals seem to be moving further and further away from imposing broad non-competes on physicians. And, the Illinois supreme court's December 1, 2011 ruling in Reliable Fire Equipment v. Arredondo, may reinforce that trend.

Reliable Fire Equipment overturned the Illinois appellate court ruling in Sunbelt Rentals, Inc. v. Ehlers, which eliminated consideration of whether an employer has a legitimate business interest in determining whether to enforce a restrictive covenant, and returned to Illinois' tradition of applying a three pronged rule of reasonableness test. The test asks the following: (a) is the restriction no greater than what is required to protect the legitimate business interest of the employer; (b) does the restriction impose undue hardship on the employee; and (c) is the restriction injurious to the public.

Although the court also held that a flexible "totality of the circumstances" approach must be used to determine whether an employer has a business interest deserving of restrictive covenant protection, the ruling confirms that employers need more than just reasonable restrictions to have an enforceable non-compete.

For doctors in Chicago, where patients might visit a number of different hospitals and/or practice groups for different conditions, it will be interesting to see what protectable interests are put forth. Although a physician practice group might be able to demonstrate a protectable interest in preventing a partner from competing, it seems that restricting a non-partner physician from securing new employment might be more difficult.

At the same time, the rule imposed by the court in Reliable Fire Equipment is flexible enough where almost anything can still happen in the area of noncompetes in Illinois. As we always tell clients, "it's not whether the employment agreement you are about to sign is enforceable that is important, but rather you want to sign an agreement that might costs tens or hundreds of thousands to litigate." Despite the Illinois supreme court's decision in Reliable Fire Equipment, the same rule applies. Think twice before you sign a non-compete.

Contract Issues: CME Reimbursement

Wed, 23 Nov 2011 15:00:25 -0500

CME reimbursement seems like it should be a simple, straightforward provision in Physician Employment Contracts. Strangely enough though, we regularly see issues related to a physician's use of time off for CME and/or reimbursements for the same.

Some practice groups limit the types of CME expenses that will be reimbursed. Another common issue is whether the time taken for CME should be deducted from a physician's vacation time.

CME is something that benefits both the employer and the physician. However, because it is also an opportunity for networking and professional development, many employers see CME as a benefit only to the physician. Therefore, they want to limit their responsibilities in connection with the same.

A doctor negotiating his/her employment agreement should be certain that he/she understands what will be reimbursed and how time off will be treated/calculated prior to accepting a position. Even these minor disputes can result in an uncomfortable working relationship and/or a protracted employment dispute.

Physician Employment Agreements: The devil's in the details

Tue, 08 Nov 2011 18:53:19 -0500

Too many doctors trust that their so-called "standard agreement" addresses all of the issues promised during their negotiations. What they don't realize is that, most of the time, the physician with whom they are negotiating has no role in actually drafting the physician employment contract. The negotiations may very well be fair and thorough, but if the promises are not in writing, it is unlikely they will be enforceable.

This is primarily because nearly every physician employment agreement reviewed by my office contains what is generally known as an integration clause. An integration clause essentially says that all promises and obligations between the parties are addressed in the agreement; and, no oral statements or promises were relied upon when executing the agreement. In other words, if it is not in writing, it is not enforceable.

This becomes especially important when you relied upon oral promises about a certain call schedule, billing support or contract term that end up not being fulfilled. Even if your employer did not intend to misinform you, the written agreement will control.

There is nothing wrong with trusting the employer's word, while also asking them to confirm it in the written employment agreement. Things change. People leave. But the agreement will remain.

Getting Out of a Bad Employment Contract

Tue, 18 Oct 2011 12:55:19 -0500

Most doctors we meet are so focused on patient care and medicine that they fail to protect their interests when signing their physician employment contracts. They proceed under the impression that, as long as they do well for their patients and build a successful practice, things will be fine with their employment. In most cases, that is an accurate assessment. However, sometimes doctors get into horrible employment situations and have almost no protections in their agreements. They get overloaded with administrative work; they are under paid because of a lack of adequate billing procedures; or they lack enough patients to build a practice because there is no marketing investment by the employer. Whatever the issue, sometimes good doctors get into bad employment situations.

You might think that a simple solution would be to resign and move on. And, sometimes that is the best and simplest solution. But, what about when you have signed a broad non-compete agreement or have committed to a community supported position that requires a substantial payout to terminate the contract? The costs of getting out of those contracts can be higher than the costs of suffering through the terms. But, no one should have to stay in a bad employment situation.

If you want out of a bad employment contract that seems to have no way out, you need to be a bit more creative about your departure. You need to analyze why the situation is so bad. Determine whether promises were made, but not kept. Identify who or what is making your employment dissatisfying. And, review your physician employment agreement. Does your employer have any obligations under the contract? Is your employer performing all of its obligations?

Find your leverage and create a plan of action. With contracts, there is almost always a way out. The key is finding the least expensive way out.

Moonlighting: Opportunity for extra income or extra liability (Parts 3 and 4)

Tue, 27 Sep 2011 14:24:12 -0500

By: Poonam Khatri

Last week we started to address some of the physician employment contract issues that arise when you decide to partake in moonlighting activities. This week, we will address parts 3 and 4 of that discussion.

Part 3: Make sure you are covered.

Don't put your license or financial resources at risk to make a little extra money. Your employer may be paying for your malpractice insurance, but that insurance may only cover you for work done on behalf of your employer. If you plan to moonlight, first confirm that your moonlighting employer has appropriate professional liability coverage. If you have your own malpractice insurance, contact your insurer and disclose your plans. Failing to disclose your outside activities could result in a loss of coverage. In the alternative, supplemental malpractice insurance is also available to cover moonlighting.

Part 4: Special concerns for residents

On July 1, 2003, the Accreditation Council for Graduate Medical Education (ACGME) common duty hour standards went into effect for all accredited residency programs. These ACGME rules include the well-known requirement that a resident have a work week no longer than 80 hours, averaged over a four-week period.

The ACGME policy has a specific section devoted to moonlighting. The section on moonlighting notes that, "Because residency education is a full-time endeavor, the program director must ensure that moonlighting does not interfere with the ability of the resident to achieve the goals and objectives of the educational program."

Thus, as a resident your ability to moonlight will be limited and require approval from your program director. You may also be subject to periodic reviews in order to continue moonlighting.

In addition to these considerations, it is a good idea to execute a written contract with your moonlighting employer for both clinical and non-clinical activities. At a minimum, your moonlighting employment contract should address key terms of your employment and define your rights and responsibilities. This will help ensure that your moonlighting position provides you with enough flexibility in the event that your primary employment responsibilities change.